RE: LBO enhanced model question
A couple of follow-up questions re the model, now that I have modified it to fit my LBO via asset purchase deal (no existing debt acquired) closing 8/30/08: a) Below you assert that such a deal structure creates no GW, but it does (as per a Partner at a major PE firm). I'm confused as to your ... A couple of follow-up questions re the model, now that I have modified it
to fit my LBO via asset purchase deal (no existing debt acquired) closing
8/30/08:

a) Below you assert that such a deal structure creates no GW, but it does
(as per a Partner at a major PE firm). I'm confused as to your contrary
assertion.

b) I've attached a copy of my model to illustrate the issue on the IRR
page re the 2 versions of SPonsor returns w/PIKs and warrants. I keep
getting #NUM errors despite having the same formulas as the clean version
we built in the videos.

c) Debt Sweep: I copied the New Senior Debt--Term Loan module to
incorporate a second tranche of senior debt. FOr discretionary pyts the
first term loan module uses a conditonal formula (row 18) that uses any
spare cash to pay down the term loan. If I copy that formula to senior
tranche #2 do I need to modify the condition to say any spare cash after
paying off mandatory pyt for tranche # + revolver sweep + tranche #1
discretionary? And so on if there's a senior tranche #3, etc.? Or,
alternatively, do I simply copy the same conditional formula for tranche
#2 and the revolver sweep only (which I what I did, in fact)? Read More

The Financial Modeling Process
I participated in the 2 day long University Bootcamp at my school. It was a valuable class, but the brevity of the program led some of us in the class to blindly follow the instructor at times. I am attempting to redo the WMT financial model on my own so that I can reinforce the skills I learned i... I participated in the 2 day long University Bootcamp at my school. It was a valuable class, but the brevity of the program led some of us in the class to blindly follow the instructor at times. I am attempting to redo the WMT financial model on my own so that I can reinforce the skills I learned in the class, but I am having trouble completing it.

After completing the BS and IS(excluding the debt sweep items) I am stuck on the CFS and the Debt Sweep. Net Income is the first line item in the CFS, but the number is incorrect because of the incomplete debt sweep line items from the IS, which makes the CFO incorrect as well. Consequently, I can't remember how we arrived at the Cash Available/(Required) Before Debt necessary to complete the circular reference of the financial model.

I need some guidance on what steps to take to properly complete the WMT template. Read More

RE: Is DCF a pre- or post-tax value?
Fair enough - hence the "art not science."

DDM is not used in practice?
Regarding page 22 slides, I wanted to clarify DDM is not used in practice (but is a mere theoretical PV concept)? Or is it used in practice if DPS makes up large % of EPS?

Package 1: Basic & Fundamental Concepts
Finance 101 - Introduction to Finance

Gordon growth / growing perpetuity method used to value?
Regarding Valuation Exercise Handouts page 3, what is this: simple dcf: normalized fcff * (1+g) / (wacc-g)? Is this a simple valuation method that uses the constant growth / Gordon growth / growing perpetuity method, to value the TEV (vs Equity Value)? Also on next row on top, I see the DDM concept... Regarding Valuation Exercise Handouts page 3, what is this: simple dcf: normalized fcff * (1+g) / (wacc-g)? Is this a simple valuation method that uses the constant growth / Gordon growth / growing perpetuity method, to value the TEV (vs Equity Value)?
Also on next row on top, I see the DDM concept used as well, which also uses the constant growth / Gordon growth / growing perpetuity method, but to value the Equity Value?


Package 2 Core Fundamental Concepts
Basic Valuation Techniques
Valuation Primer Read More